Environmental Social Governance (ESG) Practices: A Systematic Literature Review

Abstract

Corporations utilise a significant portion of environmental and human resources for production and related processes. Profit maximisation was the only motive behind any business in the past. However, its long-term existence depends on its involvement with the environment and society, which shows the importance of sustainable practices. This study attempts to analyse the prevailing status of research on corporate sustainability to find the literature gap for future research. Using specific inclusion and exclusion criteria, 114 articles published in the Scopus database were selected for in-depth review and analysis. Analysis indicates that the publication trend was tailed towards recent years. Most of the available literature was found to have been undertaken in developed countries. The most considered themes are the determinants of sustainability, sustainability and firm performance, and compliance level of sustainability. Stakeholder theory is the widely used theory for explaining corporate sustainability. Future studies need a shift towards other aspects like the impact on earnings management, cost of capital, market risk, and the like. The unavailability of an exact measurement scale compelled the researchers to use different proxies to measure corporate sustainability. More efforts are required to find the correct indicator of absolute sustainability level instead of the ESG score provided by different databases.